The Bank of Nova Scotia

Ladies and gentlemen, this conference is being recorded. Good morning and welcome to Scotiabank's Q1 2026 results presentation. My name is Manny Grumman and I'm Head of Investor Relations. Presenting to you this morning are Scott Thompson, Scotiabank's President and Chief Executive Officer, Raj Viswanathan, our Chief Financial Officer, and Shannon McGinnis, our Chief Risk Officer. Following our comments, we'll be glad to take your questions. Also present to take questions are the following Scotiabank executives. Erisbov Daenerys from Canadian Banking, Jackie Allard from Global Wealth Management, Francisco Aristeguieta from International Banking, and Travis Manchin from Global Banking and Markets. Before we start, and on behalf of those speaking today, I will refer you to slide two of our presentation, which contains Scotiabank's caution regarding forward-looking statements. All the remarks today will be on an adjusted basis. With that, I will now turn the call over to Scott.

Thank you, Manny, and good morning, everyone. Building off a year of strong and consistent financial performance in 2025, we continued our momentum in Q1 as we executed on our strategic priorities despite what remains a challenging operating environment. This quarter, we delivered adjusted earnings of $2.7 billion or $2.05 per share. Earnings per share was up 16% year-over-year as strong revenue growth aided by constructive markets and good expense control offset the expected increase in our impaired PCL ratio that Shannon will discuss shortly. Our steady-one ratio was 13.3% even after repurchasing 4.9 million shares in the first quarter under our current NCIV. Our capital deployment priorities remain investing in organic growth opportunities followed by share buybacks. Return on equity was 13%, up 120 basis points year over year, demonstrating our ability to deliver improved profitability over time. Our return on equity is tracking ahead of our investor day expectations, which gives us greater confidence in achieving our 14% plus median term target one year ahead of plan. Going forward, we expect to see return on equity expansion across each of our business units, with the largest increase coming from Canadian banking. Our key return on equity levers will be improved business mix in Canadian banking, risk-adjusted margin expansion across Canadian and international banking, the ongoing rollout of our global transaction banking capabilities, and fee income growth and productivity enhancements across the enterprise. While we continue to focus on efficiency improvements, we're also making important technology investments that will help us redefine how Scotiabank serves clients, how our teams work, and how we create long-term value, allowing us to compete and win in a rapidly changing landscape. AI is an important and growing part of our total technology spending. The investments we are making in AI include both technology and talent, and recently we have made several strategic hires from other leading global banks. We are scaling AI to boost efficiency across the bank, including through Ask AI, a tool which allows employees to get instant access to policy and product guidance. In Q1 alone, we processed over 450,000 queries across the Client Experience Center, the Branch Network, and the Client Service And in Tangerine, we recently completed an AML AI pilot that was supported by an external partner, which demonstrated positive results with a 37% reduction in existing alert volumes. We're now leveraging our internal AML AI subject matter expertise to design and implement a robust solution with improved precision and risk detection while minimizing false positives at a lower cost with faster time to market and no vendor dependency. We will continue to take a considered approach to our spending on AI to ensure that our investments are designed for long-term growth and sustainability. Turning to our operating segments, fiscal 2026 stands as a pivotal year for our Canadian banking unit where we expect earnings to grow by double digits. Consistent with our outlook, this segment has a strong start to the year driven by further sequential margin expansion, strong fee and commission growth of 8% year over year, and positive operating leverage of 2.8%. Return on equity came in at 18.1%, up 140 basis points versus the same quarter last year. This quarter, we saw demand deposits grow by 5% year over year, while our retail mutual fund net sales doubled versus the same quarter last year, and retail referrals to wealth were $2.4 billion, up 19% year over year. Term deposit balances declined given the low-rate environment, but we've been able to keep over 90% of term maturities within the bank. These maturities are either moving to demand deposits, retail mutual funds, or our wealth business through active referral from the Canadian bank. Our Mortgage Plus program continues to drive over 90% of all mortgage originations. Through this bundled offering, encompassing both lending products and deposits, we are winning new and deeper client relationships and unlocking significant value for our retail banking franchise. Last month, we were delighted to announce that Shell Canada has joined the ScenePlus Loyalty Network as our new fuel partner. This will unlock new ways for members to save and earn rewards on everyday essentials like fuel, groceries, entertainment, banking, and travel, creating more opportunities for Canadians to put rewards to work in places they shop every day. In global wealth management, we are delivering strong underlying performance. Net sales for the quarter came in at $1.8 billion, marking our sixth consecutive quarter of positive net flows, and return on equity came in at 17.9%. up 180 basis points year-over-year, and up 300 basis points since Investor Day. In Canadian wealth management, we continue to see momentum in our private bank offering with strong year-over-year loan and deposit growth. We also continue to add advisors to our full-service Scotia McLeod brokerage unit, where we had another quarter of strong net sales. In our global asset management business, we continue to see positive net sales, including ongoing strength in our branch channel. This quarter, we ranked third amongst our peers in long-term retail mutual fund sales, up from sixth in the same quarter last year, highlighting the opportunities we have to deepen penetration within our own network. And in our international wealth business, earnings are up an impressive 18% year-over-year, with 45% growth in Mexico driven by higher mutual fund and brokerage fee revenue. Performance in our international banking segment continues to be driven by solid execution, including strong expense management. Earnings were up 10% year-over-year, and return on equity came in at 16%, in line with our medium-term target. We continue working towards building deeper and more profitable client relationships across the countries that we operate in. In retail banking, non-mortgage growth continues to outpace mortgage growth, and in non-retail, we expect earnings growth to accelerate as the year goes on and the region's economies get stronger. Finally, global banking and markets delivered another strong quarter as we continue to benefit from constructive markets, but also from the productive investments we have made across the business including our new U.S. transaction banking platform. This quarter, we also saw significant margin expansion, which is being driven by more disciplined pricing on both sides of the balance sheet. Our first quarter trading results were broad-based, but we saw particular strength in equities, including equity derivatives, and another strong quarter from our peer-leading prime services business. Return on equity came in above 14% for the second quarter in a row. The U.S. continues to comprise about half of segment earnings, and we expect the share to increase over time as we continue to invest in our capabilities in that critical market. Our objective in the U.S. is to drive sustainable growth while reducing volatility and focusing on those businesses where we have the right to win. Finally, we were pleased to confirm our partnership with the Defense Security and Resilience Bank. This is yet another way that we are furthering our commitment to providing the capital, expertise, and strategic advice to strengthen Canada's most critical sectors. In closing, I am pleased that the earnings momentum that we built in fiscal 2025 has extended into the first quarter of 2026. Our results give me increased confidence in our ability to deliver on the full-year outlook we provided you last quarter. I will now turn it to Raj for a more detailed financial review.

Thank you, Scott, and good morning, everyone. My comments will be on an adjusted basis that excludes the loss on the sale of Columbia and Central America operations and the usual amortization of acquisition-related intangibles. Starting on slide eight for a review of the first quarter results, the bank reported quarterly earnings of $2.7 billion and diluted earnings per share of $2.05. Return on equity was 13%, up 120 basis points year over year, or 110 basis points, excluding divestitures, driven by strong revenue growth. My remarks that follow will address data in the last column of this slide that excludes the impact of divestitures. Revenue grew a strong 11% year over year. Net interest income grew 13% year over year as net interest margin grew 27 basis points from higher business line margins and lower funding costs. Non-interest income was up 10% year over year from higher wealth management and trading-related revenues and the positive impact of foreign currency translation. Expenses grew 7% year over year, mainly due to seasonally higher personal costs, higher volume-driven compensation from higher revenue, and advertising and development costs to support business growth. The technology-related spend that includes personal costs, amortization, professional fees, and direct technology costs of approximately $1.3 billion was up $38 million year-over-year. The pre-tax pre-provision profit grew a strong 16% year-over-year that was partly offset by PCLs of $1.1 billion. The bank generated positive operating leverage of 4.2%, and the productivity ratio improved year-over-year by 200 basis points to 52%. The bank's effective tax rate increased to 25.7% from 23.8%, primarily due to lower income in lower tax jurisdictions and higher withholding taxes paid during this quarter. Moving to slide nine, capital. We generated capital from the WB&R transaction of approximately 15 basis points. Internal capital generation was seven basis points and gains from higher fair values of OCI securities contributed a further four basis points. Capital usage was mostly related to model and methodology updates of 16 basis points and a net eight basis points related to share repurchases. The model and methodology changes include the impact of periodic update to our risk parameters and a clarification of capital methodology relating to certain exposures from the regulator. The total risk-weighted asset was $474 billion, approximately $2 billion quarter over quarter, excluding the benefit from foreign currency translation. The increase in credit risk-weighted assets from portfolio growth migration, and model and methodology updates was offset by RWA reduction from the closure of the WB under transaction. The bank remains committed to maintaining strong capital ratios. Turning now to the business line results beginning on slide 10. Canadian banking reported earnings of $960 million, up 5% year-over-year. Pre-tax pre-provision earnings also grew 5%, reflecting good revenue growth and strong expense discipline. Loans grew 3% year-over-year with mortgages up 5%, while business and personal loans were each down a modest 1%. Deposits declined 2% year-over-year. Day-to-day savings, deposits grew a strong 5% that was more than offset by a 10% decrease in personal term and a 2% decrease in non-personal deposits. Turning to the P&L. Net interest income grew 3% year-over-year from loan growth and margin expansion. Net interest margin expanded two basis points quarter-over-quarter across retail and commercial banking from improving deposit mix, i.e. less term and more day-to-day and savings deposits. Non-interest income was up 2% year-over-year, impacted by lower private equity gains this quarter. Fee and commission income grew 8% from higher mutual fund fees strong FX fees, and higher credit card revenues. The PCL ratio was 49 basis points, mostly from MIMPED. The expenses were flat year over year, benefiting from efficiency initiatives that were reinvested in the business to support growth. The business generated strong positive operating leverage of 2.8%, and the return on equity improved to 18.1%. Turning now to global wealth management on slide 11. The earnings of $488 million were up 18% with strong double-digit growth in both Canadian and international wealth management. Spot AUM was up 10% year-over-year to $436 billion, and the AUA grew 8% over the same period toward $800 billion, driven by market appreciation and higher net sales. The revenues were up 14% from higher mutual fund fees, net interest income, and brokerage revenues. The expenses were up 12% year-over-year, primarily from higher volume-related expenses that resulted in positive operating leverage of 1.9%. International wealth management generated earnings of $64 million, up 18% year-over-year, driven by growth in Mexico. The return on equity improved almost 200 basis points compared to last year to 17.9%. Turning to slide 12. Global banking and markets delivered strong earnings of $545 million, up 5% year-over-year. Revenue increased 11% as capital markets revenues were up 19% while business banking grew a modest 2%. Net interest income was up 25% year-over-year primarily due to higher margin and robust capital markets activities. The non-interest income was up 7% year-over-year due to higher trading-related revenues from fixed income and equities and higher underwriting and advisory fees. The expenses were up 14% year over year, mainly due to higher performance and share based compensation and technology costs. The business generated a strong return on equity of 14.3% this quarter. Moving to slide 13 for the review of international banking. My comments that follow are on a constant dollar basis and excluding the impact of divested operations. The segment delivered earnings of $717 million that was up a strong 8% year-over-year and 11% quarter-over-quarter. Revenue was up 4% year-over-year with net interest income up 5% from lower funding costs, mainly in Mexico, while non-interest income was up 2%. The net interest margin remains stable at 454 basis points, and expanded by 27 basis points year over year, mainly from lower funding costs due to decline in central bank rates. Deposits were up 4% year over year, while loans were down 1% year over year, as non-retail loans declined 5 billion or 6%, while retail loans grew 3 billion or 5%. The provision for credit losses was 497 million, and the PCL ratio was 131 basis points. The business generated strong operating leverage as expenses were up a modest 2% year-over-year from disciplined expense management. The effective tax rate increased to 23.5% from 21.8% in the prior quarter due to lower inflationary adjustments in Chile. The GBM business in international banking generated strong earnings of $354 million. Turning to slide 14. The other segment reported an adjusted net loss of $41 million compared to $34 million in the prior quarter. I'll now turn the call over to Shannon to discuss risk.